Corporate Jan 31, 2012
By Ankush Chibber
Move over China. Ajay Piramal just called dibs on your 'String of Pearls' strategy. Only he is doing it for the great pharma dream - discovering an original drug, or chemical compounds called new chemical entities (NCEs).
Speaking exclusively to Entrepreneur, which belongs to the Network18 Group of which Firstpost is a part, the Piramal Group chairman said that he is deploying a novel 'String of Pearls' strategy to finally achieve what no other Indian pharmaceutical company has been able to do.
"We are making small acquisitions across the world. These units can have drugs at some level of clinical research, some technology we may need, and perhaps even a team of scientists we covet," he said.
The company will then combine the Indian advantage with these 'pearls', as Piramal calls them; the Indian advantage being over 400 scientists, and the necessary cost effective infrastructure to conduct clinical trials.
Piramal says that 10 percent of these 400 scientists have had successful experience in companies abroad in drug discovery, making them the adhesive that will hold the 'pearls' together.
While Piramal Healthcare is the primary unit looking out for acquisitions of 'pearls,' US-based IndUS Growth Partners would also play an important role towards this aim.
Led by serial entrepreneur and now Harvard professor Shikhar Ghosh, and armed with $2 billion in liquid capital, the firm would also scout for pharma units to buy across the globe.
Piramal disclosed that there has been considerable progress with this strategy already. The company's lead molecule is in cancer, which is in Phase II of clinical trials and Piramal is pushing for Phase III now. There is also a device in the works for cartilage repair that his company is gearing up to launch this year.
Indian companies seeking to compete with the big guns of multinational pharma have to derisk their strategies since not all investments pay off. Most of them have thus focused on generics or new drug delivery systems (NDDS) - drugs that improve the therapeutic efficiency of an older drug - and not the discovery of NCEs, which are original chemical compounds with therapeutic value in treating a disease).Piramal is trying his luck with both NDDS and NCE.
NCE is the riskiest option of them all - and costly, too. But payoffs from a blockbuster NCE can run into billions of dollars in annual sales. From the time of the discovery of a promising NCE to final drug approval for human use, the process could take years. Many fail on the way. Hence the need to try several things simultaneously in the hope that one will come up trumps. Through his "string of pearls" strategy, Piramal is essentially buying many lottery tickets in the hope that one will hit the jackpot.
Ankush Chibber is Deputy Editor at Entrepreneur Magazine. The full story on Piramal's strategy can be accessed in the February issue of Entrepreneur magazine, now on the stands.
More From R Jagannathan.